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Weekly Market Update 06-01-2011

Weekly Market Update 06-01-2011

Old Apr 6th 2011, 12:04 am
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Default Weekly Market Update 06-04-2011

So far this week in the UK we’ve had out better than expected PMI surveys for both the construction and the services sector of the UK economy. The Service sector, being the largest contributor to overall GDP growth, is a key gauge of economic activity and in March activity jumped to a 13-month high. Sterling made strong gains on the back of this. The £ gained further this morning following a 0.1% rise in Halifax house prices, vs a previous of -0.9%. Today’s industrial production figures, however have reversed this improvement, coming in at -1.2%, vs an expected +2.4%. These figures will reconfirm the expectations that the BoE will leave policy unchanged tomorrow.

Range of the week: 1.1295 - 1.1475
Variance of the week on £10k=€180

As with the UK, the service sector activity for Europe was also released this week and showed equally robust levels of activity though the divergences between countries in the 17-nation bloc increased. Spain, Europe’s 4th largest economy again contracted.

Later today we will have factory orders from Germany and the revised GDP figure for the eurozone for Q4 last year. However, the big event of the week is tomorrows ECB meeting. It is fully factored into the current rate of the Euro that the ECB will raise rates by 0.25%. The ECB press conference after the interest rate announcement will as usual likely hold the key to any additional movement unless any of the bank’s surprise the market

Range of the week:1.5978 – 1.6363 (52 week high is 1.64)
Variance of the week on £10k= $385

On Tuesday evening we had the latest minutes from the Federal reserve’s meeting in March. The USD weakened slightly after the minutes, as some members noted that inflation risks may make it appropriate to reduce the size or pace of the asset purchase program. However, the majority agree that they would not anticipate the need to make changes to the current program before its intended completion in June. This disparity of views was also apparent in discussions re the exit strategy for the asset purchase program, with it being unclear whether members feel further accommodative policy would appropriate beyond 2011, vs potential policy tightening (ie interest rate rises).

Range of the week: 1.5445 – 1.5799
Variance of the week on £10k= AU$354

The RBA left interest rates unchanged @ 4.75 % this week in line with expectations. They also highlighted that the floods are unlikely to impact on future policy decisions. The conclusion being that we are unlikely to see an interest rate rise in Oz in the first half of this year, but the RBA will follow a mildly restrictive policy stance. If jobs growth recovers as expected then we could see interest rates rises in the second half of the year.

Range of the week:2.0915 – 2.1245
Variance of the week: on £10k=NZ$330

No major news or data for the week so far.

Range of the week: 10.7450 – 10.9980
Variance of the week: on £10k=ZAR2530

No major news or data for the week so far

Range of the week: 1.5420 – 1.5732
Variance of the week: on £10k=CA$312

No major news or data for the week so far, however unemployment figures will be released on Friday.

Last edited by Windsor2; Apr 20th 2011 at 1:19 am.
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